NBP shareholders set for dividend windfall

September 08, 2025 (MLN): In a major development for shareholders, National Bank of Pakistan (NBP) management revealed during the Analysts' Meet & Greet session that the bank will likely boost dividend payouts to avoid overcapitalization and maintain optimal Return on Equity (ROE) levels.

This will make NBP move to a traditionally generous dividend policy, with payout ratios of 70–80% sustained between 2011–2016.

The bank's dividend track record demonstrates its commitment to shareholder returns, having maintained approximately 80% dividend payout ratios between 2011-2017.

In 2024, NBP declared Rs8/- per share representing an 80% payout ratio. Street expectations stand at around 50% payout, though this is likely to increase significantly following the incorporation of the latest strong financial results.

As per the NBP Act, dividends can only be declared with year-end results, with the final decision resting with the Board of Directors.

Strong financial performance drives dividend confidence

First Half 2025 Highlights

Key Metrics
Jun 2025
Growth
Total Assets
PKR 7.2 Tn
7.1% YTD
Profit After Tax
PKR 43.5 Bn
12,028% YoY
Earnings Per Share
Rs. 20.43
12,028% YoY
Return on Equity
18.6%
-
Book Value Per Share
Rs. 229
-

Capital adequacy provides dividend flexibility

NBP's Capital Adequacy Ratio of 27.28% provides substantial room for dividend distributions while maintaining regulatory compliance.

Capital Ratios
Jun 2025
Regulatory Req.
Buffer
Total CAR
27.28%
14.00%
1,328 bps
CET-1 Ratio
20.14%
13.00%
714 bps
Leverage Ratio
3.72%
3.00%
72 bps

Under IFRS-9 accounting standards, NBP routed Rs6.9bn in realized capital gains through Other Comprehensive Income (OCI) rather than Profit & Loss.

Metrics
Reported
With OCI Gains
Difference
Profit After Tax
PKR 43.5 Bn
PKR 47.0 Bn
PKR 3.5 Bn
Earnings Per Share
Rs. 20.43
Rs. 22.13
Rs. 1.70

NBP's deposit franchise continues to demonstrate robust growth with total deposits reaching Rs4.7tr, marking a strong 21.7% growth year-to-date. The bank's Current Account and Savings Account (CASA) ratio improved to 83% compared to 79% at end-2024, reflecting the quality of its deposit base.

NBP maintains approximately 13% market share of Pakistan's deposit market, reinforcing its position as one of the country's leading banks.

Loan Portfolio Highlights

Segment
Outstanding (PKR Bn)
% of Portfolio
Corporate
667
42%
Agriculture
120
8%
Consumer
212
13%
SME/Commercial
119
8%
Total Gross Advances
1,581
100%

NBP remains the largest agriculture lender in Pakistan with Rs120 billion in loans. 

Investment Book

NBP's Rs5tr investment portfolio is well-diversified across government securities, with Treasury Bills comprising 28.7% (Rs1.35tr), fixed-rate Pakistan Investment Bonds (PIBs) at 18.0% (Rs0.86tr), and floating-rate PIBs representing the largest component at 53.0% (Rs2.39tr).

The portfolio maintains an average maturity of 2.74 years and generates a healthy yield of 13.9%, providing stable income streams while managing interest rate risk effectively.

Management noted there is no further re-pricing risk on the investment book, with a revaluation surplus of PKR 145 billion comprising government securities (Rs62.3bn), equity investments Rs34.2bn), and foreign equities (Rs45.6bn).

Digital Transformation & Operational Efficiency

NBP invested Rs2bn in CAPEX during 1H2025, focusing on digital transformation:

Technology Investments (Rs Million)

Category
2024
1H2025
Computer & Peripherals
2,556
984
Systems & Software
477
424
ATMs
811
556
Total IT CAPEX
3,844
1,964

NBP's digital transformation efforts are gaining momentum with 2.1 million registered mobile app users, demonstrating growing customer adoption of digital banking services.

The bank maintains an extensive physical presence through 1,503 branches serving over 9 million customers and a network of 1,500 ATMs across the country.

A significant milestone was achieved with the rollout of the upgraded core banking system in May 2025, which now supports both conventional and Islamic banking operations, enhancing operational efficiency and customer experience.

Risk management amidst Flood

Addressing investor concerns over the recent floods' potential impact on agriculture loans, NBP management provided reassuring details about the bank's Rs120bn agriculture portfolio.

Significantly, Rs52bn (43% of the agriculture portfolio) is secured against gold ornaments, providing liquid collateral that substantially reduces NPL risk.

The portfolio also includes Rs27bn in loans to PASSCO (Pakistan Agricultural Storage and Services Corporation).

Management drew confidence from the bank's experience during the 2022 floods, where the impact was minimal with only  Rs1.5bn in loans requiring restructuring, demonstrating the resilience of NBP's agriculture lending practices.

NBP shares have delivered exceptional performance with a remarkable 135%, significantly outperforming the broader KSE-100 index, which gained 28% over the same period. Despite this strong rally, the stock continues to trade at an attractive Price-to-Book ratio of 0.5x, suggesting potential value for investors.

The bank has successfully crossed the $1 billion market capitalization milestone, cementing its position among Pakistan's most valuable financial institutions.

NBP management expressed confidence in maintaining strong financial performance while optimizing capital allocation through enhanced dividend distributions.

The bank's robust capital position, diversified revenue streams, and ongoing digital transformation initiatives position it well for sustainable growth and shareholder returns.

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